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MULTIPLE OFFERS ON CONTRACTS

October 31st, 2017 9:17 AM

Barbara’s Blog:

Real estate inventory is still lower than usual for this time of year. There is a lot of new home construction in the area, but the existing resale homes, especially in the senior communities, remain very low.

For this reason, there can be more than one offer on the same home at the same time. Multiple offers are most common when inventory is low and there are fewer properties from which to choose. Buyers are used to making a lower offer first, expecting to negotiate with the sellers to a mutually agreeable price. However, when other buyers are also competing for the same home, this can backfire and cause a buyer to lose the home of their dreams.

In the current market, it is best to offer the “highest and best” price affordable to a buyer, especially when there is knowledge of a second or third offer. There is no time for back and forth negotiations and the seller will usually agree to the best offer initially given. Sometimes, the highest price is not the one accepted if there are contingencies, such as mortgage approval, appraisals, a buyer home to sell or closing costs involved. A cash offer will often supersede an offer with a mortgage contingency, even if the price is a bit lower.

When agents offer their sellers a commission discount if they bring the buyer, it gives the seller more negotiation power on price. However, if a buyer brings another agent into the transaction, then the seller must pay full commission, thereby reducing the amount of negotiation in the selling price.

When looking for a home in the current market, it is wise to consider these points and be prepared to make a decision quickly once the proper home is found. Time is of the essence and waiting may bring huge disappointment.